Doing Business in Oman

Transcription

George Mathew & Co
Correspondent firm in Oman
DOING BUSINESS IN OMAN
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Forward
The aim of this publication is to provide general information about Doing business in
Oman in broad outline. All information is up to date as of February 2011. Users are
requested to contact the local RSM Correspondent firm George Mathew & Co for further
details and updates.
RSM International: Global requirements, local advice
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worldwide.
About RSM Correspondent firm in Oman
George Mathew & Co. is the Correspondent firm of RSM International in Oman.
George Mathew & Co. is a firm of Chartered Accountants operating in the Sultanate of
Oman since 1988. It is one of the few audit firms in the Sultanate accredited with the
Capital Market Authority of Oman which entitles the firm to act as statutory auditors of
public joint stock companies, investment funds, licensed companies operating in the
securities market and insurance companies registered in the Sultanate of Oman.
The firm provides services in audit, accounting, tax, consulting and risk management
services.
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In a world of
different cultures,
it’s good to have
advisors who are
consistent
everywhere.
RSM International is sixth largest network of
independent accounting and consulting firms worldwide.
RSM International is represented in 83 countries and
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RSM member firms are driven by a common vision of
providing high quality professional services to ambitious
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Chapter
7
Chapter 1: General
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Chapter 2: Types of Business Entities
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Chapter 3: Foreign Exchange Controls
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Chapter 4: Taxation
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Chapter 5: Employment
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Chapter 6: Accounting
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Chapter 7: Intellectual Property Rights
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Chapter 8: Asset Valuation
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Chapter 9: Investing in Oman
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Chapter 10: Listing Rules
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Chapter 11: Relevant Websites or Further reading
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Chapter 12: Contacts
Contents
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Chapter 1:
General
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Chapter 1: General
1.1 Oman – an introduction
Oman, officially the Sultanate of Oman, is an
Arab country in southwest Asia on the
southeast coast of the Arabian Peninsula
bordering the United Arab Emirates on the
northwest, Saudi Arabia on the west and
Yemen on the southwest. Muscat is the capital
of the country.
1.2 Geography
The Sultanate of Oman occupies the SouthEastern corner of the Arabian Peninsula. It has a coastal line extending almost 3165 kms
from the Strait of Hormuz in the North to the borders of the Republic of Yemen,
overlooking three seas; the Arabian Gulf, Oman Sea and the Arabian Sea.
The total area of the Sultanate of Oman is 309.5 thousand sq. kms and it is the third
largest country in the Arabian Peninsula.
The Sultanate is composed of varying topographic areas consisting of plains, wadis and
mountains. The most important area is the plains overlooking the Oman Sea and the
Arabian Sea. There are several mountain ranges, the most important of which are ‘Al
Hajr’, extending in the form of an arch from Ras Musandam in the North to Ras Al-Hadd
and Al Qara’ in the South Western corner of Oman. A major portion of the land area is
sand and desert. There are several islands located in Oman’s waters, the largest of which
is Masirah in the south-east, which is accessed by boat and plane.
1.3 Climate
The climate differs from one area to another; it is hot and humid in the coastal areas in
summer, hot and dry in the interior with the exception of higher mountains, which enjoy a
moderate climate throughout the year. Generally, the Sultanate has little and irregular
rains. Heavy rains fall only some times, with the exception of Dhofar Region where heavy
and regular rains fall between June and October.
1.4 History
Oman has a distinct history with a long tradition of entrepreneurship and international
trade. It has age old maritime traditions dating back to sea-going commerce which
flourished between the 7th and the 15th century A.D when Oman dominated the sea
routes extending as far as Africa to the south, China to the east and Europe to the west.
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Oman combines the strong traditions of the Middle East with 21st century modernity. The
rich historic culture of Oman and the hospitality and tolerance of the Omani people attract
visitors and foreign investors alike.
1.5 Population
Total population of Oman in 2009 (estimated) is about 3.17 million consisting of 2.02
million of nationals and 1.15 million of expatriates. The literacy rate is approximately 81%
of total population. 54% of the population is in the age group of 15 to 64, 43% of the
population is in the age group of 0 to 14 and 3 % of the population are in the age group of
above 65 years.
1.6 Transportation
Roads and rails
Roads are an important mode of transportation in Oman. Major cities have well paved
roads, interlinked with fly-overs, highways and express-ways. A national railway network
is under implementation.
Airports
The country has two airports, one at Muscat which is an international airport and another
at Salalah. Four new airports are under developmental stage.
Marines
Mina Sultan Qaboos, Muscat’s main port, is a trading hub between the Persian Gulf, the
Indian subcontinent and the Far East. Salalah port and Sohar port are also the major
ports of the country.
1.7 Telecommunication
The telecommunication services in Oman are well organised. The country has facilities for
fix line telephones, mobile telephones and internet services. Oman has roaming facilities
in most of the countries of the world for its mobile network. The telecommunication sector
in Oman is liberalised and the sector is served by different operators.
1.8 Language
The official language is Arabic but English is also widely used.
1.9 Weights and measures
For weights and measures, the metric system is used.
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1.10 Government
Oman is an absolute monarchy and His Majesty Sultan Qaboos Bin Said is the Head of
the State and ruler of the country from 1970 onwards when he ascended to the throne.
“The Basic Law” of the state promulgated on 6th November, 1996 lays down the legal
frame work of reference, governing the functions of the different authorities and
separating their powers.
The Council of Ministers assists the Sultan in drawing up and implementing the general
state policy. The Council submits recommendations to the Sultan on economic, political,
social, executive and administrative matters.
Oman has a bicameral legislature jointly referred to as Majlis Al Oman (Council of Oman).
It comprises two chambers viz., Majlis Al Dawla (Council of State) and Majlis Al Shura
(Consultative Council). The members of the Majlis Al Dawla are appointed by Royal
Decrees. Majlis Al Shura is an elected body. The civil administration is managed through
local municipal bodies.
Oman’s judicial system is a three tier legal system, with the Court of First Instance,
Appellate courts and the Supreme Court. The courts have jurisdiction over all civil,
criminal, commercial, labour, tax and rent matters.
1.11 Economy
The economy is highly dependent on the country’s oil resources. Oil and natural gas are
the main products of exports.
Marble, limestone, gypsum and chromium are the other major natural resources of the
country. Petroleum, agriculture and fishing are the major industries of the country.
The government is diversifying the economy and is seeking foreign investment, especially
in information technology, tourism, water, electricity and higher education.
Against the backdrop of the global economic situation, the Government of Oman is
committed to public spending and all the planned projects are going ahead as scheduled.
A number of large infrastructure and developmental projects are now under planning,
implementation or construction stage. These include new sea ports, airports, roads,
national railway network, industrial zones and special economic zones.
The Gross Domestic Product (GDP) at current prices is RO. 20.53 billion (US$ 53.395
billion).
The local currency is Rial Omani (RO). The Rial Omani is freely convertible and is pegged
to the US$ at a fixed parity. 1 RO is equal to US$ 2.60.
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1.12 General information
Time difference
The local time is ahead of Greenwich Mean Time by 4 hours.
National day
The country observes the National Day on 18th November of each year.
Work days
The Government offices work from Saturday to Wednesday. Banks work from Sunday to
Thursday. Private sector organisations work from Saturday to Wednesday with Thursday
generally being a half working day.
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Chapter 2:
Types of Business Entities
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Chapter 2: Types of Business Entities
2.1 Commercial laws – legal framework
The business activities in Oman are mainly governed by the following laws.
The commercial companies law
The Commercial Companies Law (Royal Decree No. 4/1974) is the controlling law
through which business may be conducted in Oman.
The commercial law
The Commercial Law (Royal Decree No. 55/90) provides for the regulation of commercial
activities, including commercial obligations and contracts, commercial instruments and
bankruptcy related matters.
Commercial registration law
Commercial Registration Law (Royal Decree No. 3/74) requires all business to be
registered at the Ministry of Commerce and Industry. The Ministry allots a Commercial
Registration number to every applicant, which is to be quoted by all business entities on
all its official documents. The Commercial Register can be accessed by the public.
Foreign capital investment law
All non-Omanis, whether natural or juristic persons, shall not conduct any business or
participate in an Omani company without a licence issued from the Ministry of Commerce
and Industry in accordance with the provisions of the Foreign Capital Investment law.
2.2 Types of business entities
The various types of entities under which a business can be established and conducted in
Oman are given below:
General joint stock company – (SAOG)
These are the companies whose minimum 40% shares are issued to the public. The
minimum capital requirement is RO. 2 million for setting up a SAOG (Société Anonyme
Omanaise Générale) company. The promoters can have a maximum shareholding of
60%. Minimum number of shareholders in SAOG companies is three with no maximum
limit. SAOG companies are managed by a Board of Directors, which is elected by the
shareholders. Annual shareholders meeting should be held within three months of
financial year end. SAOG companies are required by law to withhold 10% of their net
profits after tax as legal reserve to the extent of one third of its share capital.
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Closely held joint stock company - (SAOC)
These are companies which are closely held and the shares are not issued to public. The
minimum capital requirement of an SAOC (Société Anonyme Omanaise Closed) company
is RO. 0.5 million and the minimum number of shareholders is three with no maximum
limit. SAOC companies are managed by a Board of Directors, which is elected by the
shareholders. Annual shareholders meeting should be held within three months of
financial year end. SAOC companies are required by law to withhold 10% of their net
profits after tax as legal reserve to the extent of one third of its share capital.
Limited liability company (LLC)
A Limited Liability Company (LLC) is a commercial company with a fixed capital divided
into equal shares. The minimum capital required is RO. 20,000. LLC can be formed with
two or more natural or juristic persons. The number of partners of the LLC must not
exceed forty. LLC companies are managed by managers (individuals). Annual
shareholders meeting should be held within six months of financial year end. LLC
companies are required by law to withhold 10% of their net profits after tax as legal
reserve to extent of one third of its share capital.
Limited partnership
The Limited Partnership is a commercial company which comprises of two categories of
partners: one or more general partners who are jointly and severally liable for the Limited
Partnership’s debts to the full extent of their property and one or more limited partners,
whose liability for the partnership’s debts are limited to the amount of their contribution to
the partnership capital, provided such amount has been stated in the Limited
Partnership’s Memorandum of Association. The minimum capital required is RO. 3,000.
The limited partners do not participate in the management and their name is not used as
part of the partnership’s name.
General partnership
A General Partnership is formed by two or more natural or juristic persons and which aims
at practising businesses under a certain trade name. A partnership agreement must be
registered with the Ministry of Commerce & Industry. The minimum capital required is RO.
3,000. The partners of a General Partnership are jointly and severally liable for the
General Partnership’s debts to the full extent of their property.
Joint venture
A joint venture is formed by two or more juristic or natural persons establishing a legal
relationship between its members without affecting third parties. The joint venture must
not have a name of its own and its existence must not be raised as a defence against
claims made by third parties. It is not registered in the Commercial Register. However, it
is considered a separate entity for tax purposes. Joint venture is an unincorporated entity
which has no legal personality.
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Holding company
The holding company is a Joint Stock Company or a Limited Liability Company which
financially and administratively controls one or more other companies which become
subsidiary to such company by means of its holding at least 51% of such subsidiary
company or companies whether they are Joint Stock Companies or Limited Liability
Companies. The capital of a holding company shall not be less than RO. 2 million and a
holding company shall neither hold shares of General or Limited Partnership companies
nor shall it hold any shares in other holding companies.
Sole proprietorship
A sole proprietorship is a form of business which can be carried out by Omani nationals or
by GCC nationals pursuing certain economic activities. The minimum capital requirement
to form a sole proprietorship is RO. 3,000. The proprietor is personally liable for debts to
the full extent of his assets.
Branch of foreign company
A foreign company can set up a branch office in Oman if it has a contract with the
Government or Government owned organisations. Banking institutions and insurance
companies are licensed to operate as branch and certain professional services
companies also may be permitted to set up branch offices. Branches are permitted only
when their head office has been in operation for a minimum period of 10 years. The head
office is required to submit a guarantee for the operations of the branch.
Commercial representative office
Foreign companies are permitted to have a legal presence in Oman for the purpose of
conducting market research, general advertising, marketing and promotional activities and
liaison with commercial entities in Oman. The Representative Office cannot undertake
any commercial activities except importing samples for promotional purposes and can
only be established by companies that have a head office and at least three branches in
other countries.
Commercial agent
A Commercial Agent is appointed by foreign businesses to export goods and services to
Oman. All agencies must be registered with the Ministry of Commerce & Industry. Non
exclusive agencies are allowed even though there is no bar for imports through suppliers
other than the official agents.
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2.3 Foreign investment entities
Foreign investments through equity shareholding are allowed in the following types of
legal entities:
Joint stock companies
Foreign equity participation up to 100% of the company’s capital is permitted for projects
which contribute to the development of the national economy, provided the project’s
capital is not less than RO. 500,000. The company will need Foreign Capital Investment
Law licence, Commercial Registration and Oman Chamber of Commerce and Industry
registration.
Limited liability companies
Foreign equity participation up to 70% of the company’s capital is permitted if approved by
the Ministry of Commerce and Industry provided the minimum share capital is RO.
150,000. Foreign equity participation up to 100% of the company’s capital is permitted for
projects which contribute to the development of the national economy, provided the
capital of the company is a minimum of RO. 500,000. The company will need Foreign
Capital Investment Law licence, Commercial Registration and Oman Chamber of
Commerce and Industry registration.
Branch office
Foreign companies can setup branch offices for executing Government contracts or for
businesses declared necessary for Oman by the Council of Ministers.
A Commercial Registration and Oman Chamber of Commerce and Industry registration
are necessary and sponsorship by Omani agents may be required in certain
circumstances.
Representative office
Foreign companies can operate in the Sultanate through its representative office.
Registration with Ministry of Commerce and Industry and Oman Chamber of Commerce
and Industry are required to operate the office in the Sultanate. Activities which
representative office can perform are in trade, industry and services sector.
Agencies
Foreign companies can operate in the Sultanate through its Agencies. Registration with
Ministry of Commerce and Industry and Oman Chamber of Commerce and Industry are
required to operate the office in the Sultanate. Agency agreements should be registered
in the Register of Agents and Commercial Agencies. Activities which agencies can
perform are mainly whole sale trade and export of goods.
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2.4 Audit requirements
The auditing profession in Oman is regulated by the Ministry of Commerce and Industry.
Only audit firms registered with the Ministry of Commerce and Industry are permitted to
audit and issue audit reports of entities in Oman.
Joint stock companies have to get their financial statements audited and approved at their
Annual General Meeting, which have to be held within three months of the year end. They
must publish the annual audited financial statements in the newspapers within three
months from the end of the financial year.
Joint stock companies can appoint only those auditors who are accredited with the Capital
Market Authority of Oman. Joint stock companies must rotate their auditors after each
four year period.
Every Limited Liability Company shall have at least one auditor if the number of partners
exceeds ten, or the capital of the company exceeds RO. 50,000 or the appointment is
demanded by partners representing at least one fifth of the capital of the company.
Brokerage companies licensed by the Capital Market Authority (CMA) must submit halfyearly audited accounts to the CMA.
Banks have to submit audited accounts to Central Bank of Oman within one month from
the end of the financial year.
Insurance companies have to submit their audited financial statements within five months
of the financial year end to the Commissioner of Insurance, Ministry of Commerce and
Industry.
Central Bank of Oman has made it compulsory for entities that enjoy credit facilities above
certain limits to submit their audited financial statements to their banks within four months
of the entity’s financial year end.
The income tax law requires that all taxable entities with a capital of RO. 20,000 or more,
should attach the audited financial statements with their final tax returns, which should be
submitted within six months of the entity’s financial year end.
2.5 Incorporation of business entities
Registration procedures
Every business entity doing business in Oman must be registered in the Commercial
Register of the Ministry of Commerce and Industry. Business entities must also register
with the Oman Chamber of Commerce and Industry and the local municipality. All nonOmani person doing business in Oman have to also register under Foreign Capital
Investment Law.
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2.6 Comparison of main investment vehicles
Joint stock companies whose shares are issued to public should have a minimum capital
of RO. 2 million whereas closely held joint stock companies should have a minimum
capital of RO. 0.5 million.
Foreign equity participation up to 100% of the company’s capital may be permitted in
specified projects provided the project’s capital is not less than RO. 500,000.
Limited liability companies (LLC)
LLC can be formed with minimum capital of RO. 20,000 if it is 100% Omani company. If
the entity comprises of Omani national and a foreign investor, the minimum capital
requirement is RO. 150,000 of which the maximum foreign participation allowed is 70%.
Foreign capital participation in specified projects may be permitted upto 100%, provided
the capital of the company is a minimum of RO. 500,000.
Formation, operation and management through LLC are easier, faster and smoother.
2.7 Procedures to set up entity
The procedures and documentation to register various entities are generally the following.
These procedures may vary depending on specific circumstances. In each case the
prescribed fees should be paid to the concerned authorities.
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The memorandum and articles of association of the company is to be approved by
Director General of Commerce.
Application for authorization to the Ministry of Commerce & Industry shall be signed
by, at least, three promoters accompanied by the company’s articles of association
and memorandum of association signed by all promoters.
Bank certificate asserting the payment of the part due of the value of the shares
subscribed by the promoters.
Limited liability companies
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The memorandum of association of the company is to be signed by all the
shareholders of the company.
The number of shares to be owned by each shareholder is to be determined and the
nominal value of all shares is to be fully paid in cash or in kind.
The company is to be registered in the Commercial Register.
A special account is to be opened with a bank operating in Oman.
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A report from an auditor licensed to operate in Oman is to be submitted for
confirming the value and payment of each shareholder’s contribution in kind.
Sole proprietorship, limited partnership, general partnership
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Approval of proposed commercial name.
Completion of standard form.
Submission of identity / passport documents of the partners and authorized
signatories.
Branch of a foreign entity
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Completion of required forms.
Articles of association of the parent company along with the corporate documents
duly attested.
Power of attorney of the head office for the appointment of the branch manager and
certificate from the head office assuming the responsibility for the activities of the
branch, duly attested.
Copy of Passport of the authorized branch manager.
Copy of the work contract / agreement made with the Government or a Government
company in Oman.
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Representative office of a foreign entity
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Completion of required forms.
Articles of association of the parent company along with corporate documents duly
attested.
Power of attorney of the head office for the appointment of the office manager and
certificate from the head office assuming the responsibility for the activities of the
office duly attested.
Copy of Passport of the authorized officer.
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2.8 Capital contribution
For a Limited Liability Company (LLC) with a minimum capital of RO 150,000 the
maximum foreign equity participation is restricted to 70% of the capital.
For Limited Liability Company or Joint Stock Company, foreign participation is allowed up
to 100% where there is a minimum capital of RO. 500,000.
For SAOG companies, promoters’ contribution is a minimum of 30% of the share capital
and has to be contributed as per the public issue schedule.
The capital contribution is required at the formation stage itself, as a bank certificate has
to be submitted for capital contribution in cash. Where the contribution is in kind, a
certificate from an auditor licensed to operate in Oman should be submitted confirming
the value and payment of each shareholder’s contribution in kind.
2.9 Dissolution and liquidation of business entities
Dissolution procedures for partnerships and joint ventures are simple and fast. They
require registration of the Partnership Dissolution Deeds.
A Limited Liability Company shall be dissolved for any of the following reasons:
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Expiration of the term fixed of the company or the occurrence of any event obligating
the dissolution provided it is laid down in the memorandum of association or articles
of association of the company.
Accomplishment of the purpose for which the company was established or
impossibility of accomplishing such purpose.
Transfer all shares or all stocks in the capital of the company to one partner.
Bankruptcy of the company or loss of all or most of its capital is such loss renders
the effective use of the remaining capital impossible.
Agreement of the partners to dissolve the company.
If at the request of any interested party, and for any of the foregoing reasons or for
any other reason seriously impairing the company’s ability to accomplish its object,
the Authority for the Settlement of Commercial Disputes determines the dissolution
of the company.
The partners meeting may resolve, at any time, to dissolve the company upon the
favourable vote of a majority of members representing, at least, three quarters of the
Company’s capital.
After its dissolution the Limited Liability Company shall be liquidated in accordance
with the law and the provisions of the company’s memorandum of association,
provided such provisions shall not violate any provisions of the law of mandatory
nature.
A joint stock company shall be dissolved for any of the reasons specified in the
Company’s articles of association or any of the first six reasons mentioned above.
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2.10 Annual statutory filing
Filing of financial statements
Joint stock companies should file copies of audited financial statements to the Capital
Market Authority and to the Commercial Registry at least two weeks prior to the Annual
General Meeting of the Company.
Filing of income tax returns
Business organizations holding a Commercial Registration, including those wholly owned
by Omani nationals, must file provisional and annual income tax returns. Provisional tax
return has to be filed within three months from the end of the financial year along with the
payment of tax dues and the final tax return has to be filed within six months of the end of
the financial year, along with the audited financial statements as applicable and balance
tax payable if any.
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Chapter 3:
Foreign Exchange Controls
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Chapter 3: Foreign Exchange Controls
3.1 Foreign exchange controls
Oman does not have any foreign exchange controls. Oman imposes no restrictions on the
repatriation of profits or capital by foreign investors from Oman.
The Rial Omani is fully convertible and is pegged to the U.S dollar at a fixed parity,
1 RO ≈ US$ 2.60.
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Chapter 4:
Taxation
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Chapter 4: Taxation
4.1 Overview of Oman tax system
Business income tax – direct tax
Income tax in the Sultanate of Oman was introduced by Income Tax Decree of 1971, and
is governed by the Income Tax Law. It is administered by the Secretariat General of
Taxation at the Ministry of Finance.
The practices of the Secretariat General of Taxation are continuously developing and
therefore, it is essential to obtain up to date advice before taking decisions. A new tax law
has been introduced in 2009 and is effective for the year 2010 and onwards.
Business income tax is the only form of direct tax in Oman.
Personal income tax
There is no personal income tax in Oman.
Indirect tax
Customs Duty and some miscellaneous local taxes / levies constitute the indirect tax in
Oman. Oman has no Consumption Tax, Value Added Tax (VAT) or Sales Tax.
4.2 Income tax incentives for foreign investors /
enterprises
The government has introduced various measures and has provided several tax
incentives to give a stimulus for economic growth and to attract foreign investment in
Oman which include the following:
i.
Exemption from income tax for a five year period to any income that accrues to an
establishment or a Company from the following activities carried on as their main
business.
Industry in accordance with Law for Unified Industrial Organization of Gulf
Cooperation Council Countries.
Mining in accordance with the Law of Mining.
The export of locally manufactured or processed products.
The operation of hotels and tourist villages.
Farming and processing of farm products including animals and the processing or
manufacturing of animal products and agricultural industries.
Fishing and fish processing, farming and breeding.
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University education, college or higher institutes, private schools, nurseries or
training colleges and institutes.
Medical care by establishing private hospitals.
The tax exemption may be renewed and extended for another period of five years. Losses
incurred for the first five years for the activities specified above, can be carried forward,
without any time restriction, to be set off against subsequent income.
ii.
iii.
iv.
v.
Income accruing to a foreign entity from the activity in the field of shipping or air
transport shall be exempted from tax provided a similar treatment is accorded on a
reciprocal basis in the other country.
Income accruing to funds set up outside Oman to deal in Omani securities listed in
Muscat Securities Market shall be exempted from tax.
For businesses established in Free Trade Zones, special concessions are given
such as 30 year exemption from income tax, import of commodities at zero duty,
foreign equity participation upto 100% and facility to indefinitely carry forward and set
off loss.
Oman has signed several treaties for avoidance of double taxation.
4.3 Direct tax and rules
Scope
Every income arising or derived in Oman is taxed in Oman. Tax is charged on taxable
income accruing to a tax payer in a tax year. Unless specifically permitted, income is to be
recognised on accrual basis and the basis has to be followed consistently.
The new tax law confirms the global system of tax under which Omani proprietorships and
companies are liable to tax on all their income wherever earned.
The term taxable income specifically includes income earned during the pre-incorporation
or pre-commencement of business, which is deemed to accrue on the date of
commencement of that business.
Registration
It is mandatory for all tax payers to register with the Secretariat General for Taxation by
filing a prescribed form within three months from the date of incorporation and notify
within two months, any changes in address, name and legal status.
Applicability
The taxable entities are Omani proprietorships, Omani companies and permanent
establishments. The term permanent establishment refers to foreign entities (including
persons) carrying out activities in Oman either directly or through a dependent agent.
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GCC nationals
Citizens of Gulf Cooperation Council (GCC) countries are treated as Omani nationals for
tax purposes if they are engaged in specific economic activities. GCC countries are UAE,
Qatar, Bahrain, Kuwait, Saudi Arabia, and Oman.
Chargeability
Income chargeable to tax as per Income tax law means income of any kind, whether in
cash or in kind, and includes in particular
i.
ii.
iii.
iv.
Profit from any business
Consideration for carrying on researches and development
Consideration for the use or right to use of computer software
Consideration for lease or usufruct of real estate, machinery or other moveable or
immovable property
Profits resulting from granting any person a usufruct of the right to use a real estate,
machinery or any other moveable or immovable property
Dividends, interests, or discount received
Royalties or management fees
v.
vi.
vii.
Tax period
The tax year is a twelve month period commencing from 1st January and ending on 31st
December. However, business entities may apply to Secretariat General of Taxation to
use any other date for tax year closing provided this date is followed consistently.
The first taxable period at the commencement of operations may be less than twelve
months or for up to a maximum of eighteen months. In the event of a company being in
liquidation, the accounting period may be for less than twelve months.
Financial statements and records
The financial statements must be prepared under the accrual basis of accounting. Prior
approval has to be taken for maintaining accounts under any other basis. The financial
statements have to be audited by auditors legally licensed to operate in Oman. All
accounting books, vouchers and documents have to be preserved for at least ten years
from the end of the accounting year. All books of accounts have to be maintained in Rial
Omani. Books may be maintained in foreign currency only with the authorization from the
Secretariat General of Taxation.
Computation of income
The taxable income for any tax year means the gross income for the year after deducting
expenses incurred for earning the income or allowing any deductions or set off or any
exemption claimed under the income tax law or other laws.
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Rates of tax
Every taxable entity in Oman shall pay tax at a flat rate of 12% on taxable income in
excess of RO. 30,000. No tax is payable on income up to RO. 30,000. Tax payers
engaged in petroleum exploration, shall pay tax at a rate of 55% of the taxable income in
respect of any income derived from the sale of petroleum. The word Petroleum includes
crude oil, natural gas, asphalt, oil derivatives and associated substance of each.
Exemption from income tax
i.
ii.
iii.
All dividend income and capital gains on sale of shares listed on the Muscat
Securities Market are exempted from tax.
Profits derived from turnkey contracts are exempt from tax, provided the services
terminate before reaching Oman port and the supplier does not conduct business
activity in Oman.
Income from business activities mentioned in the section 4.2 above “Income Tax
Incentives for Foreign Investors / Enterprises” are also exempt from tax as explained
therein.
Assessment
Assessment is completed on the basis of the annual return of income. The tax authorities
may ask for several details before completing the assessment.
Assessments may be made within five years from the end of the tax year for which the
final return was submitted. If no final return is submitted, the time limit for making the
assessment shall be ten years from the end of that tax year for which the final return was
due.
In cases of fraud and use of means of deception, the time limit for making assessment
shall be extended to ten years.
Objection
Objection must be filed within 45 days from the date of serving (posting) the assessment
order. The time limit for consideration of objection is five months which is extendable to
further five months.
Offences and penalties
Non-compliance of the following attracts penalty and/or punishment that may include
imprisonment. The penalty may be imposed on the tax payer or the principal officer of the
tax payer or on both:
i.
ii.
iii.
Failure to submit provisional or final return
Failure to declare correct taxable income
Failure to submit any statements, information, financial statements or accounting
records or any other document within the time specified
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iv.
v.
vi.
Failure of attendance at the date and place specified
Abstention from answering any questions
Failure by the owner of the business establishment or permanent establishment to
designate a principal officer
vii. Deliberately obtaining a tax exemption without being eligible
viii. Intentionally destroying, concealing, or getting rid of any documents, records or
financial statements requested by the Secretariat General of Taxation
Carry forward of business losses
Losses are allowed to be carried forward for a maximum period of five years and offset
against future profits. Losses shall not be carried back. For foreign entities which carry on
business through more than one permanent establishment, the loss of any of those
permanent establishments for any tax year is allowed to be carried forward only after
being reduced by the taxable income for that tax year of other permanent establishment
owned by that foreign entity. A change in the ownership of the entity does not generally
affect the position with regard to losses carried forward. Industrial companies which have
been exempted from tax for five years can carry forward the loss indefinitely until fully
utilised.
4.4 Special taxation rules
Representative offices, branch offices, trading offices set up by a foreign person in Oman
will be treated as a tax payer and chargeable to income tax in Oman.
The Income Tax Law defines a Permanent Establishment as a fixed place of business
through which a business is wholly or partly carried on in Oman by a foreign person either
directly or through a dependent agent. It includes especially:
i.
ii.
iii.
iv.
A place of sale, place of management, branch, office, factory or workshop
A mine, quarry or other place of extraction of natural resources
A building site, a place of construction or an assembly project
Any foreign person who provides consultancy or any other service in Oman for a
period or periods of not less than 90 days in the aggregate in any 12 months whether
directly or through employees of that person or others designated by that person to
perform such services
The fixed place of business shall not be considered as a permanent establishment if it is
used solely for the following purposes:
i.
ii.
Storage, display or delivery of goods or merchandise belonging to that person
The maintenance of a stock of goods belonging to that person for the purpose of
storage, display or delivery or processing by another person
Purchase of goods, merchandise, or collection of information for the purpose of the
business
iii.
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iv.
v.
Carrying on any other activity of a preparatory or auxiliary character for the purposes
of the business
The combination of any of the activities mentioned above provided that the overall
activity of the fixed place of business resulting from that combination is of a
preparatory or auxiliary character
4.5 Expenses
Deductible expenses
The law permits deduction of all expenses incurred during the tax year to the extent that
such expenses are actually incurred for the purpose of generating the income. Any
expenses if determined by the tax department as excessive to the related income will be
disallowed to the extent of amount deemed to be excessive.
The following expenses are also considered for deduction:
i.
Expenses incurred before the commencement of business or registration, but only at
the amount and to the limits specified in the Law, on condition that the date of
commencement of business or the date of registration falls within the accounting
period ending in that tax year
ii.
Amounts paid during that tax year to fulfil the dues of the employees of the
establishment, Omani company or the permanent establishment in accordance with
the Labour Law or any other Laws
iii. Contribution paid by the taxpayer in that tax year, in its capacity as employer, to the
Public Authority for Social Insurance in accordance with the provisions of the Social
Insurance Law
iv. Amounts paid during that tax year on contribution for the pension funds in
accordance with the rules
v. Any debts, if they are considered to have become bad debts during that tax year in
accordance with the conditions and rules
vi. Amounts paid by the taxpayer, either as a cost of acquisition of any of the assets
specified in the Tax Law, subject to certain exclusions, or as necessary expenses in
case disposal is made within the accounting period ending in that tax year.
vii. Depreciation of capital assets or the balancing allowance for the accounting period
ending in that tax year
viii. Audit fees incurred during that tax year
ix. Sponsorship fees incurred during the tax year, subject to the rules
x. Donations paid during the tax year to entities approved by the Financial Affairs and
Energy Resources Council on condition that the aggregate amount of donations
does not exceed five percent of the gross income of the taxpayer for that tax year
xi. The deduction for depreciation is available on any capital asset owned by the
business entity and used by it for business purposes only if it continues to be in use
for that purpose till the end of that accounting period. It is calculated at the following
rates on the cost incurred by the business entity
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Type of fixed asset
Rate of
Depreciation
First class buildings
4%
Second class buildings
15%
Quarries, jetties, pipelines, road and railways
10%
Building used for hospitals and educational Institutions
100%
Heavy machines, vehicles, computers
33.33%
Furniture and fixtures
33.33 %
Machinery comprising drilling rigs
10%
General machinery, equipment and tools
15%
Ship or aircraft
15%
The rate of depreciation is doubled if the building is used by an industrial establishment,
but not as a building for the housing of employee’s offices or storage.
The new tax law includes pooling of asset concept for depreciation on machinery and
equipment. Machinery and equipment includes computer software, installations, furniture,
fixtures and fittings and vehicles. There are three pools and each asset falling under
machinery and equipment has to be allocated to a respective pool and the deprecation on
each pool is calculated on reducing balance method. To calculate depreciation for the
year, an opening written down value plus addition of assets minus sale proceeds of
disposals of assets is taken as asset base of that pool and depreciation rate is applied on
it. For the category of Machinery and equipment, there would be no need to compute
taxable gain or loss on disposal separately, since the sale proceeds are considered in
computation of depreciation.
Asset wise calculation of depreciation on straight line basis continues to apply for
buildings, ships, aircrafts and intangible assets.
xii.
Head Office Charges: Foreign companies operating in Oman through branches or
having deemed permanent establishment status are entitled to a deduction for head
office expenses which are incurred by the head office and allocated or charged by
the head office to the permanent establishment subject to some conditions
xiii. Managerial / Partner’s remuneration payable in accordance with Commercial
Companies Law
xiv. Remuneration payable to the chairman/board of directors of joint stock companies in
accordance with Commercial Companies Law
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Non-deductible expenses
The following deductions are not allowed in arriving at the taxable income:
i.
ii.
iii.
iv.
v.
Any capital expenditure incurred during the tax year, except those which are
deducted in accordance with the provisions of Tax Law
Any amounts payable or paid as tax on income in accordance with the provisions of
Tax Law, or any other tax on income which is payable or paid in any other country
for that tax year or for any other period
Any costs borne or losses incurred during that tax year where the costs were
recovered, or the losses were compensated under a contract, insurance policy,
Court judgement or others
Any amounts considered by the Secretariat General not to be reasonable by
reference to the value of the services rendered or other considerations relating to
such services
Loss from the disposal of securities listed in Muscat Securities Market
4.6 Special zones
Industrial estates
The Ministry of Commerce and Industry has created industrial estates at various
locations. The industrial estates are managed by the Public Establishment for Industrial
Estates (PEIE). The industrial zones have fully developed plots with appropriate
infrastructure facilities. Investment incentives include the provision of industrial plots in
industrial zones for nominal charges.
Free trade zones
Free Trade Zones have been established for attracting foreign investment. These zones
help to create focussed and concentrated industrial growth. The major incentives provided
are:
i.
ii.
iii.
iv.
30 year exemption from income tax
Import of commodities at zero duty
Foreign equity participation up to 100%
Tax loss can be carried forward indefinitely for set off
4.7 Withholding tax
Introduction
Withholding Tax was introduced by Royal Decree 87/96. Withholding Tax is charged on
certain payments made by businesses in Oman to foreign companies which do not have a
permanent establishment in Oman.
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Applicability
The payments to which the withholding tax applies are:
i.
ii.
iii.
iv.
Royalties
Consideration for research and development
Consideration for the use of or right to use computer software
Management fees
Rate
The rate of withholding tax is 10% of the payment made or credit given.
Exemption
Dividend and interest income do not attract withholding tax.
Responsibility for tax deduction and payment
The Omani based tax payer is responsible for deducting the withholding tax and paying it
to the Secretariat General of Taxation, within 14 days of the end of the month in which the
amount has been paid or credited, whichever is earlier.
4.8 Double taxation agreements
Oman has entered into double taxation agreements with several countries including
Algeria, China, Egypt, France, India, Italy, Korea, Lebanon, Mauritius, Pakistan,
Russia, Singapore, South Africa, Sudan, United Kingdom and Yemen.
4.9 Transfer pricing
The Income Tax Law empowers the Secretariat General of Taxation to recompute the
taxable income of a tax payer if it is established that the main purpose of any transaction
between related parties is to avoid part or whole of any liability to tax due and payable for
that tax year.
Related party transactions
The Secretariat General of Taxation may make adjustments in respect of transactions
between related parties. The department may also disallow all or part of any expense it
believes to be inappropriate or unreasonable in relation to the value of goods sold or
services rendered. The level of management and advisory fees are scrutinised carefully.
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4.10 Due date of tax returns filing and payments
Every tax payer has to file provisional and final income tax returns for a tax year. The
returns have to be filed at Secretariat General of Taxation in prescribed forms. The return
should reflect the amount of taxable income for that year and the tax due and payable for
the year. The tax is due for payment within three months from the end of the relevant
year.
Provisional return of income
This return must be filed within three months of the end of the financial year along with the
payment of tax.
Annual return of income
This return must be filed within six months of the end of the financial year, along with the
payment of balance tax due if any.
4.11 Indirect taxes
Custom duty
Customs duty at a flat rate of 5% is levied on the CIF value of all imported goods, except
for essential consumer goods, which are exempt. Customs duty is levied at a rate of
100% on alcoholic beverages, tobacco and derivative products. On meat and meat
products custom duty is at 20%.
The classification of items for the purpose of determining the custom duty is amended
from time to time by Ministerial decisions.
Other taxes
Municipal tax is levied @ 5% on hotel income, 3% on property rents, 10% on leisure and
cinema income and 2% on electricity bills exceeding RO. 50 per month. Tourism levy of
4% is charged on hotel income.
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Chapter 5:
Employment
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Chapter 5: Employment
Labour relations in Oman are extremely peaceful. Omani Labour Law covers employers
and employees in the public and private sectors. It applies to both local and expatriate
employees. The employer must obtain prior permission from the Ministry of Manpower to
employ expatriates and the request must specify the occupation of the expatriates.
5.1 Omanisation
To ensure that the local population is employed to the greatest extent possible, the
government encourages staffing with Omani nationals. Guidelines issued by the Ministry
of Manpower require private companies operating in specified sectors to employ Omani
nationals as a certain percentage of their work force.
Omanisation percentages are fixed for different sectors. In addition certain specific jobs
are fully reserved for Omani nationals.
5.2 Foreign entry visas and work permits
The Government of Oman has issued visas procedures, which are aimed at liberalizing
the entry regulations into Oman.
Citizens from certain countries mentioned in list number one such as Austria, France,
Germany, Italy, United Kingdom and United States of America are eligible to obtain single
entry visit visas on arrival on all ports of entry into the country.
Citizens of countries on list number one and list number two such as Albania, Egypt,
India, Iran etc. can obtain multiple entry visas from Oman’s diplomatic missions or
Commercial Representative Offices in these countries.
In addition, for countries not covered under these lists, express visas may also be issued
within 24 hours of application.
Employment visas are issued for a two year period to foreigners coming to Oman for
employment with multiple entry and renewal facility.
5.3 Foreign personnel
Employers wishing to employ foreign nationals must obtain labour clearances from the
Ministry of Manpower. An employer may engage a foreign employee only in the jobs
specified by the labour clearance.
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The foreign national, after obtaining the visa, has to apply for and receive a Resident card
which enables the person to work in the country. The resident card is for two year validity
and has to be renewed each time.
Expatriates may be employed where there is a lack of local expertise, subject to the
Omanisation regulations. Expatriates from some countries are required to obtain medical
certification from Government of Oman approved clinics in their home country before their
employment visa could be applied in Oman.
5.4 Labour law
The comprehensive Omani Labour Law issued in 2003 applies to Omani and foreign
employers and employees. The law governs work contracts, wages, overtime pay, end of
service benefits, leave, work hours, industrial safety, labour disputes, vocational training,
and the employment of Omani and foreign nationals.
5.5 How to recruit staff
Newspapers, employment sites on the internet and recruitment agencies are the best
avenues for recruitment. Labour clearance and visa are required before employing
expatriates.
5.6 Employment procedure
Every employer has to enter into an employment contract with the employee. The contract
should include the following:






Personal details of the worker
Wages
Notice required to terminate the contract
Commitment to comply with the contract and laws of Oman
To respect the culture and traditions of Oman
Not to engage in activities harmful to national security
5.7 Cost of employment
There is availability of local Omani nationals and expatriates for various jobs. The costs
vary from job to job and the skill involved. Generally the employers provide the expatriate
employees with housing or rent allowance in addition to basic salary.
The Government prescribe a minimum monthly basic salary of RO. 180 plus RO. 20 as
bonus for Omani employees. In addition, employer must pay their Omani employees a
monthly accommodation allowance of RO. 10 and monthly transportation allowance
RO. 10.
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5.8 Welfare benefits
Social security law
Omani employees are covered by the Social Security Law. This law is implemented by
the Public Authority for Social Insurance (PASI). Employers are required to register all
Omani employees with the PASI and make the mandatory contributions / deductions.
Employer has to pay 10.5% of employee’s basic salary as contribution towards social
insurance while employee has to contribute 6.5% from his basic salary as social
insurance every month.
Terminal benefits
Expatriate employees are entitled to gratuity upon termination of employment at the rate
of 15 days basic salary per year during the initial three years of service and at the rate of
one month’s basic salary for every subsequent year. Gratuity is calculated on the last
basic salary drawn.
Special requirements for foreign nationals
For each expatriate employed, an employer must make an annual contribution of RO. 100
towards a vocational training levy.
5.9 Termination of employment
Employers may terminate employment without notice on the following grounds:








fraud
damaging mistake
failure to comply with safety conditions
leaking trade secrets
criminal sentencing
working under the influence of alcohol
attack on the employer or other employees
major failure to carry out a contract
Employees may terminate employment due to the following:



fraud on the part of the employer
employer’s failure to fulfil major contractual obligations
threats at the workplace
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5.10 Trade union
Oman law allows the formation of labour unions. The law forbids a strike for any reason.
Collective bargaining is not permitted. However, there exist labour management
committees in companies with more than 50 workers. These committees are not
authorised to discuss conditions of employment including hours and wages. The Labour
Welfare Board provides a venue for grievances.
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Chapter 6:
Accounting
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Chapter 6: Accounting
6.1 Accounting requirements
As per the Oman Commercial Law, all commercial entities must maintain proper books of
accounts. The books of account have to be maintained in Oman and the books can either
be in Arabic or in English. The accounts have to be maintained in Rial Omani unless
specific permission is taken for maintaining in any other currency.
The books of accounts and supporting documents have to be retained for ten years.
The accounts have to be maintained on accrual basis of accounting and in accordance
with generally accepted accounting principles.
International financial reporting standards (IFRS)
Oman has adopted International Financial Reporting Standards (IFRS).
Every joint stock company must prepare its financial statements in accordance with the
requirements of IFRS.
Other business entities in Oman are also generally following IFRS.
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Chapter 7: Intellectual Property Rights
Oman is a member of the World Intellectual Property Organisation (WIPO) and has taken
measures to promulgate legal provisions to protect intellectual property rights. The
Copyright and Related Rights Law (Royal Decree 65/2008) - protecting the rights of
authors of literary, artistic and scientific works; and the Industrial Property Rights Law
(Royal Decree 67/2008) promulgated in 2008 consolidated the law relating to trademarks,
industrial designs, geographical indications, integrated circuits and patents, to bring the
law in line with the conventions, agreements and laws of WIPO.
7.1 Patents
A law on patents issued in October 2000 establishes a facility for the registration and
protection of patents. Patents may be registered for a term of 20 years with Intellectual
Property Department of Ministry of Commerce and Industry.
7.2 Trademarks
Royal Decree No. 38/2000 promulgated the law that protects trademarks, trade
information, trade secrets and trade against illegal competition and infringement.
Trademarks include words, letters, signatures, drawings and similar symbols used to
distinguish commodities, products and services. Both local companies and foreign
companies with no physical presence in Oman may apply to the Department of
Trademarks for trademark protection. Trademarks are protected for renewable ten-year
periods from the date of their registration with the Ministry of Commerce and Industry.
7.3 Copyrights
Royal Decree No. 37/2000 promulgated the law on copyrights and related rights.
Copyrights are protected for the lifetime of the author and 50 years thereafter. The
copyright may be registered with Intellectual Property Department, Ministry of Commerce
and Industry.
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Chapter 8: Asset Valuation
Fixed assets are recorded at historical cost.
Valuation of assets including land, building, plant and machinery etc is done by registered
valuers based in Oman.
The revalued figures may be recorded in the books of accounts as per the valuation
report.
Revaluations are ignored for income tax purposes.
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Chapter 9:
Investing in Oman
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Chapter 9: Investing in Oman
9.1 Overview
Oman is among the few countries in the world that are considered progressive and ideal
for long-term investment. Oman possesses a modern infrastructure, a growing industrial
base, a stable government, financial and monetary stability, a freely convertible currency
and, most notably, the institutions that protects investors and ensures their access to the
market.
Poised at the entrance to the Arabian Gulf, the source of the world's major oil exports,
Oman is in the middle of the East-West trade routes, ensuring easy access to markets in
the Middle East, India, South-East Asia, Africa and Europe.
Membership of various regional associations has further opened up the trade routes.
Oman’s membership of the World Trade Organization (WTO) ensures its adherence to
international trade norms and practices. Oman is also a member of the Indian Ocean Rim
Association for Regional Cooperation, which opens up a potential market of over 1.5
billion consumers. In addition, membership of the Gulf Cooperation Council (GCC)
ensures duty-free export of products within the member countries
Sultanate of Oman has worked at creating the right climate for new investments by
developing a free, competitive economy with equal opportunities for all, and shaping laws
and regulations that encourage enterprise. Liberal investor-friendly policies have been
implemented, while procedures for clearances and approvals have been simplified.
Education and vocational training have been given priority to ensure that a professionally
trained workforce is being developed. The abundant local labour can be harnessed and
trained to specific requirements. In addition, investors have easy access to a skilled and
disciplined expatriate workforce.
Oman also has a culturally rich and religiously tolerant society. The country has all social
amenities and the traditional hospitality of the land which acts as an added incentive for
foreign investors.
Oman is ranked highly by several international financial institutions and ranking bodies.

In November 2010, the United Nations Development Programme (UNDP) listed
Oman as the most improved nation in the last 40 years from among 135 countries
worldwide.
Oman is ranked 65 out of 183 economies in the Economy ratings by International
Finance Corporation, a member of the World Bank in its publication, “Doing Business
2010 in Oman”.

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



Oman is ranked 3rd out of 17 countries in the Middle East / North Africa region and
43rd globally, with a score of 67, in the index of Economic Freedom 2009. Oman’s
overall scores are above the world and regional averages.
Oman has received an ‘A’ long term and ‘A-1’ short term sovereign credit rating with
a ‘stable’ outlook in Standard and Poor’s sovereign ratings for the year 2009.
Moody’s has given Oman an A2 stable ranking in its sovereign rankings.
Oman is ranked 25th out of 140 countries on Global Peace Index 2008 – which is an
indicator of peace, economic progress and prosperity.
9.2 Business incentives for investing in Oman
The government’s strategy of diversifying the economy is reliant on attracting foreign
direct investments into the country. The government offers several attractive incentives for
foreign investors in certain specified business and industries as given below.
Income tax
i.
ii.
iii.
Five years tax holiday (renewable)
Tax losses may be claimed against future profits with no time limit
No personal Income Tax
Custom duty
Exemption on import of plant, machinery and raw material for five years from
commencement of production
General
Repatriation of capital and profits of the project.
These incentives can be enjoyed by the following businesses and industries:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
Mining industry
Export of locally manufactured / processed products
Tourism promotion operation of hotels and tourist villages
Production and processing of farm products, poultry farming
Production and processing of animal products and agro industries
Fishing industry, fish processing, fish farming
Public utility projects
Educational institutes
Hospitals and medical education institutes
For Industrial installations, Ministry of Commerce and Industry may provide financial
incentives, subsidised utilities, preferential land allocation and trade promotion in addition
to renewing the first five year tax holiday period.
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9.3 Business promotion agencies
The Ministry of Commerce & Industry
The Ministry of Commerce and Industry has set up a ‘one-stop-shop’ to assist investors
with obtaining mandatory statutory clearance required to commence business in Oman,
such as commercial registration from the Ministry of Commerce & Industry, registration
with the Chamber of Commerce, and license from the Muscat Municipality or other
regional municipality, required prior to commencement of business.
The Oman Chamber of Commerce & Industry (OCCI)
OCCI is the apex representative body of the private sector. OCCI provides economic,
legal, commercial and other consultative support services to investors; whilst also
promoting bilateral trade and the exchange of technical expertise. Any business that is
commercially registered in Oman is required to join OCCI in Muscat or a branch in other
regions.
Oman Centre for Investment Promotion & Export Development
(OCIPED)
The centre was established to promote private entrepreneurship in the Sultanate. Its
objective is to boost both local and international private sector investment in key
economic sectors and to work in partnership with businesses located in Oman to enhance
export of Omani goods and services to key global markets.
The Public Establishment for Industrial Estates (PEIE)
PEIE was established by Royal Decree in January 1993 with the objective of developing
and administering Industrial Estates established by the Ministry of Commerce and
Industry. PEIE works closely with the Ministry of Commerce and Industry, the Oman
Chamber of Commerce & Industry, OCIPED, other regulatory authorities, and utility
providers to develop partnerships that assure business success. PEIE has been
responsible for developing and managing prime industrial land. All PEIE estates are
suitable for manufacturing, warehousing, distribution and office space. Moreover, it
assists companies in assembling sites, developing buildings, facilitating, permitting and
assessing infrastructure needs, reviewing incentives available for projects as well as
helping firms market and promote their products.
Land is available for lease for a period of 25 years (renewable up to 99 years) at the
Industrial Estates.
Export Credit Guarantee Agency (ECGA)
The ECGA operates as the national export credit guarantee agency. It is an entity,
associated with the Oman Development Bank, and fully funded by the Government. The
ECGA provides the following services:
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i.
ii.
iii.
iv.
v.
Export insurance coverage to Omani exporters
Assisting exporters to obtain financing at concessionary interest rates
Facilitating the grant of pre-shipment financing to exporters
Post-shipment financing
Underwriting services
9.4 Special zones
Several free trade zones, referred to as ‘free zones’ have been created by Royal Decree;
these zones are regulated by the Ministry of Commerce & Industry. The free zones are a
medium in the country’s plans to spur the economic growth beyond the oil sector.
Following are the major free zones presently in operation in Oman.
Knowledge oasis muscat (KOM)
Knowledge Oasis Muscat is a public-private sector led technology park that is totally
committed to creating an environment dedicated to supporting technology oriented
businesses. KOM is an ideal environment to grow a high tech company which brings
together a diversity of enterprises from industry niche as varied as M-commerce to
international call centres.
Salalah free zone
Salalah Free Zone is located near Salalah port which has good world class infrastructure
enabling easy access to the Gulf region, Red sea, Indian Ocean and East Africa.
Al-Mazunah free zone
It has proximity to Yemen border attracting trade opportunities with Yemen. Incentives are
also available for trading in this zone like no visa required between Oman and Yemen.
9.5 Banking and finance
Central Bank of Oman (CBO)
The Central Bank of Oman determines monetary policy. It is also the regulator of Oman’s
financial sector.
Financial sector
The financial sector comprises commercial banks, specialised banks, non-banking
finance and leasing companies and money exchange houses.
Foreign banks have been permitted to operate branch offices and foreign shareholdings
in local banks are encouraged.
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Finance and leasing companies are engaged in leasing, hire purchase, debt factoring and
similar credit related activities.
The non-banking financial intermediary sector comprises insurance companies, public
and private pension funds, capital markets, brokerage companies and the Muscat
Securities Market.
Oman Development Bank SAOC
Oman Development Bank SAOC was set up to promote and encourage economic
development in Oman. It provides financial as well as technical assistance and advisory
services to small, medium and large projects in the fields of manufacture, agriculture,
animal resources, fisheries, tourism, education etc.
The bank has several subsidised loan products for education, health, agriculture, animal
wealth and fisheries, industrial projects and tourism projects.
9.6 Availability of skilled labour
Skilled manpower including professionals from Oman and abroad are available in Oman.
Traditionally the business entities in Oman have been employing semi skilled and skilled
manpower from abroad and the need to obtain manpower with certain specialised skills
from abroad is still there. The Omani Government has taken necessary steps to employ
Omani nationals with skills to gradually replace workers from abroad.
9.7 Oman USA free trade agreement
Oman has signed a Free Trade Agreement with United States of America. This
agreement removes barriers for inward investment from USA and creates ample
opportunities for growth of business and services both ways.
As per the Free Trade Agreement, US citizens and fully US owned companies are
allowed to establish business in Oman without local Omani participation in equity and also
they can own property in Oman.
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Chapter 10:
Listing Rules
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49
Chapter 10: Listing Rules
10.1 Stock exchange
The Muscat Securities Market (MSM) is the Stock Exchange of the Sultanate of Oman.
The MSM has been established as a public organization with independent legal status. It
aims to encourage savings and improve investment awareness as well as protect
investors. MSM takes on important self-regulatory functions over the brokers and listed
companies, in addition to serving as an exchange house. All Omani Joint Stock
Companies are required to be members of the MSM and the shares and bonds of Public
Joint Stock Companies have to be listed there.
The MSM targets to provide a better environment for investing funds in securities and to
consequently realize mutual benefit for the national economy and the investors. It also
facilitates the trading of securities issued by Joint Stock Companies as well as bonds
issued by the Government, commercial companies, investment fund’s units and any other
domestic or foreign securities agreed upon by the Market
10.2 Listing rules
An Omani Joint Stock Company shall submit a listing application within one month from
the date of registration along with the following documents and information:
i.
ii.
iii.
iv.
v.
Certificate of commercial registration and attachments thereto
List of authorized signatories and specimens of their signatures
Copies of company’s memorandum, article of association and the prospectus
An attested copy of the minutes of the constitutive general meeting
Any additional requirements the Capital Market Authority may prescribe
The company shall complete the procedure for registration in the Commercial Register
within two months from the date of listing.
Listing of securities in the Market shall be pursuant to the decision of the General
Manager of MSM.
Non-Omani issuers who are desirous of listing their securities in the market may file an
application in the format prescribed by the Market.
Securities shall be listed in the Market as follows:
50
|
Regular market
Shares of companies and units of investment funds shall be listed in this market, subject
to the following terms and conditions:
i.
ii.
iii.
iv.
The paid-up share capital is not less than RO. 2 million
Shareholders’ equity is not less than the paid-up capital
The company has earned net profits in the last two years
The number of days during which the shares and units are traded are not less
than 30 trading days in a year and annual turnover of the share or unit is not less
than 5%
Parallel market
Shares of companies and units of investment funds shall be listed in this market in case of
the following
i.
ii.
iii.
Newly established joint stock companies and investment funds
Joint stock companies and investment funds whose shareholders’ equity is not less
than 50% of the paid-up capital
Public joint stock companies and investment funds who fail to satisfy the
requirements of listing in the Regular Market
Third market
Shares of companies and units of investment funds shall be listed in this market in case of
the following
i.
ii.
iii.
Closed joint stock companies
Joint stock companies and investment funds whose shareholders’ equity is less than
50% of the paid-up capital
Public joint stock companies and investment funds who fails to satisfy the
requirements of listing in the Regular Market
Bond market
Bonds shall be listed in this market segment.
|
51
10.3 Capital Market Authority
In 1998, a new Capital Market Law established the Capital Market Authority (CMA), a
government authority which regulates the issuing of shares and trading of securities,
supervises the operations of the MSM and supervises all publicly listed companies.
The CMA has developed a Corporate Governance Code and it is also monitoring the
implementation of the Corporate Governance Code. It is now mandatory for public
companies to describe the various measures of Corporate Governance in their Annual
Report. The auditors have to separately report on the Corporate Governance of the
Companies.
10.4 Muscat depository & security registration company
This is a Closed Joint Stock Company (SAOC) established in 1999 and is jointly owned
by the private sector and the MSM. It acts as the sole provider of registration services,
transfer of ownership of securities and safe keeping of ownership documents.
52
|
Chapter 11:
Relevant Websites or Further Reading
|
53
Chapter 11: Relevant Websites or Further
Reading
11.1 Government organizations
Ministry of Finance
www.mof.gov.om
Information Technology Authority
www.ita.gov.om
Telecommunications Regulatory Authority
www.tra.gov.om
Ministry of Justice
www.moj.gov.om
Ministry of Transport & Communications
www.motc.gov.om
Ministry of Regional Municipalities, Environment.
www.mrmwr.gov.om
Ministry of Tourism
www.mot.gov.om
Ministry of Education
www.moe.gov.om
Ministry of Commerce & Industry
www.mocioman.gov.om
Ministry of Manpower
www.manpower.gov.om
Muscat Securities Market
www.msm.gov.om
Capital Market Authority
www.cma.gov.om
Oman Tender Board
www.tenderboard.gov.om
Oman Chamber of Commerce and Industry
www.chamberoman.com
Omani Centre for Investment Promotion
www.ociped.com
Public Establishment for Industrial Estates
www.peie.om
Secretariat General for State Audit
www.sai.gov.om
Royal Oman Police
www.rop.gov.om
Knowledge Oasis Muscat
www.kom.om
Ministry of Information
www.omanet.om
54
|
Chapter 12:
Contacts
| 55
Muttrah Business District
Office of George Mathew & Co
RSM Correspondent firm in Oman
Chapter 12: Contacts
12.1 About RSM International
RSM International is a worldwide network of independent accounting and consulting firms.
RSM International and its member firms are separate and independent legal entities.
RSM International does not itself provide accounting or consultancy services. All such
services are provided by members practising on their own account.
RSM International is represented by independent members in 83 countries and brings
together the talents of more than 32,500 individuals in over 700 offices worldwide.
The network’s total fee income of US$3.9bn places it amongst the top six international
accounting organisations worldwide. Member firms are driven by a common vision of
providing high quality professional services, both in their domestic markets and in serving
the international professional service needs of their client base.
RSM International is a member of the Forum of Firms. The objective of the Forum of
Firms is to promote consistent and high quality standards of financial and auditing
practices worldwide.
RSM International
Executive Office
11 Old Jewry
London EC2R 8DU
United Kingdom
Telephone: + 44 (0) 20 7601 1080
Fax: + 44 (0) 20 7601 1090
Email: [email protected]
Website: www.rsmi.com
56
|
RSM Contacts
RSM International Executive Office
Chief Executive Officer - Jean Stephens
Tel: +44 20 7601 1080
RSM Correspondent firm in Oman:
George Mathew & Co.
International Contact - George Mathew
Tel: +968 24708626 / 24795995
Regional liaisons
Africa
North America
Regional Contact - Clive Betty
Tel: +27 11 329 6000
Email:[email protected]
Regional Contact - Frank LeBihan
Tel: +1 312 634 3400
South America
Europe
Regional Director - Bob Burdett
Tel: +1 312 375 7143
Regional Director - Robert Coles
Tel: +44 20 7601 1096
Asia Pacific
Middle East
Regional Director - Neil Hough
Tel: +61 3 9286 1862
Regional Contact - Shuaib A. Shuaib
Tel: +965 2296 1000
Details of other RSM contacts at the International Executive Office and contact details for
all RSM member and correspondent firms are available at the RSM International website:
www.rsmi.com
|
57
12.2 About local RSM correspondent firm
George Mathew & Co
George Mathew & Co. is a firm of Chartered Accountants operating in the Sultanate of
Oman since 1988, providing a comprehensive range of services in audit, accounting, tax,
consulting and risk management services. It is one of the few audit firms in the Sultanate
of Oman accredited with the Capital Market Authority of Oman which entitles the firm to
act as statutory auditors of public joint stock companies, investment funds, licensed
companies operating in the securities market and insurance companies registered in the
Sultanate of Oman.
George Mathew & Co is a correspondent firm of RSM International, the 6th largest
network of independent accounting and consulting firms worldwide, with over 700 offices
in 83 countries, and more than 32,500 people on hand to serve your needs.
The office address and location are:
Postal Address:
George Mathew & Co.
P.O. Box 1488, Muttrah, PC 114
Sultanate of Oman
International Contact: George Mathew
Email:
[email protected]
Telephone: +(968) 24708626 / 24795995
Telefax: +(968) 24794350
Website: www.gmc-om.com
Office Location:
George Mathew & Co.
7th floor, Building No.37
Muttrah Business District
Muscat,
Sultanate of Oman
58
|
|
1
George Mathew & Co.
7th floor, Building No.37, Muttrah Business District
P.O. Box 1488, Muttrah, PC 114, Muscat, Sultanate of Oman
Tel: +968 24708626 / 24795995; Telefax: +968 24794350
E Mail: [email protected]; Website: www.gmc-om.com.
RSM International
Executive Office, 2nd Floor, 11 Old Jewry, London EC2R 8DU, UK
T: +44 (0)20 7601 1080 F: +44 (0)20 7601 1090
E: [email protected]
The aim of this publication is to provide general information about doing business in Oman and
every effort has been made to ensure the contents are accurate and current. However, tax
rates, legislation and economic conditions referred to in this publication are only accurate at
time of writing. Information in this publication is in no way intended to replace or supersede
independent or other professional advice. Copies of this booklet or additional information can be
obtained from the RSM International Executive Office or George Mathew & Co.
RSM International is the brand used by a network of independent accounting and consulting
firms. Each member of the network is a legally separate and independent firm. The brand is
owned by RSM International Association. The network is managed by RSM International
Limited. Neither RSM International Limited nor RSM International Association provide
accounting or consulting services. The network using the brand RSM International is not itself a
separate legal entity of any description in any The network is administered by RSM International
Limited, a company registered in England and Wales (company number 4040598) whose
registered office is at 11 Old Jewry, London EC2R 8DU. Intellectual property rights used by
members of the network including the trademark RSM International are owned by RSM
International Association, an association governed by articles 60 et seq of the Civil Code of
Switzerland whose seat is in Zug.
© RSM International Association, 2011

Doing Business in Oman

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